Nokia receives "absurd" 300 million Euro sales tax bill; new charges not expected to block Microsoft purchase

Nokia receives
On Friday, Nokia's tax problem with the Indian government got a little worse as the Finnish handset manufacturer received a 300 million Euro tax bill ($414 million USD) from the state of Tamil Nadu. Nokia immediately called the bill "absurd." The 11th largest state in India, Tamil Nadu is alleging that Nokia handsets produced by its plant in Chennai were sold in India instead of being exported as Nokia claims.

If Nokia sold the devices in India, it would be responsible to pay taxes on the transactions. If Nokia exported the phones, there would be no taxes owed by Nokia. The latter filed a writ with the Madras High Court and a hearing is expected next week. Despite the legal issues involved, Nokia says that there should be no delay in Microsoft's purchase of Nokia Devices and Services. Nokia says that the deal will close at the end of this month, and could be announced April 2nd at BUILD 2014.

Nokia was ordered last week by the Indian Supreme Court to guarantee the Indian government 35 billion Indian Rupees ($573 million USD) and waive some of its legal defense rights in order to get the plant in Chennai turned over to Microsoft, which is part of the deal between the Redmond based software giant and Nokia. The factory is one of Nokia's largest handset manufacturing facilities and the Indian government had seized it alleging that Nokia owed it back taxes on phones sold over several years.

source: Reuters



1. mikelemon

Posts: 95; Member since: Nov 21, 2013

India can't tax its own country because the people are too poor so it is going after foriegn companies. India is a crook plain and simple.

5. PBXtech

Posts: 1032; Member since: Oct 21, 2013

It is what it is. Companies want to build factories in areas where work force wages are extremely low, then they need to start paying for things like this.

7. Ashoaib

Posts: 3298; Member since: Nov 15, 2013

but nokia has a better way out by using the same amount to build a new plant in china... nokia should get away with it...

8. PBXtech

Posts: 1032; Member since: Oct 21, 2013

Are you familiar with the requirements for opening factories in China? The Chinese government wants access to any companies IP if they relocate there, I seriously doubt Nokia wants to give that up.

10. papss unregistered

I wouldn't want to give anything to china that I don't have to

12. PBXtech

Posts: 1032; Member since: Oct 21, 2013

You'd be surprised how many corporations due just to save a buck in wages and worker benefits. I lost a job after the factory I worked in was shut down and moved to China, and a large dose of IP was given up just to cut overhead.

23. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Vietnam seems to be building phones - based on the sources of leaks. China is even sourcing some of their component work from Vietnam as their labor cost has increased.

21. tumchaaditya

Posts: 71; Member since: May 21, 2012

Be careful there. Don't build a stereotype image based on limited knowledge.

22. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Indian govt. entities are piling on now. They see a target of opportunity. Expect the city where the plant is located to file next. Nokia should just deduct the cost of building a new plant from the sale proceeds they are going to receive from MS and let the Indian govt. units fight amongst themselves over the building and equipment. Meanwhile, the employees are out a good paying job. Penny-wise and pound-foolish.

34. rd_nest

Posts: 1656; Member since: Jun 06, 2010

If the news was about Samsung/Google, you would have told us how corrupt Samsung or Google is. Nobody (which includes your fav Nokia as well) should be allowed to exploit the law. If they are found to have used malpractices, they should be severely fined. The court will decide, not you. If that means, Nokia has to go out of India, so be it. If anyone wants to do business in India, the law should be very strict irrespective of the brand. Just because it's a high value brand, doesn't mean they should be allowed to avoid taxes. I say look into the books of each and every company and check who's not paying taxes. Make them suffer big time if they are not paying the taxes.

44. Altair

Posts: 367; Member since: Feb 02, 2012

You should shut uo your ignorance troll mouth. You don't know anything about this case. Nokia has payd these taxes to Finland already once. Finland and India has agreement about double taxing, which should protect companies that they dont need to pay the same tax to two different country. In this case India wants the money to payd to them, instead of Finland. India Goverment is corrupted and greedy. In this case they don't use any realistic numbers, instead they grap highest possible number they have guts to demand and hope they get the money. They can't tax its poor population, so they take the money where they can. India is biting its own knee. Who wants to invest in corrupted and greedy country like India is. Now get back to your dark closet and stay there please.

51. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

You should be the one the shut your gap. Did you even read the article. It's about Nokia selling the phones to the local market and not paying their sales tax.

47. asingha94

Posts: 295; Member since: Apr 08, 2012

lol!!you are in a cave!!see India's GDP in wikipedia for your basic knowledge!You are still living in old dogma

2. yadu004

Posts: 72; Member since: Apr 26, 2013

Well the Indian Economy is down, Majority imports to this country being "Electronic Items" rather than Gold or Petroleum,also there are not many Indian Electronic Equipment manufacturers who can rise up to International standards to contribute to the GDP, and then there are these companies which don't even bother paying tax to the government!!. :/

3. Beijendorf unregistered

And that's how you cripple your chances of having foreign investments, India. Well done.

6. yadu004

Posts: 72; Member since: Apr 26, 2013

Everybody has to pay Taxes!! Anyway If they have no foreign investments in the country better still. This would lead to a lot of startups from INDIA itself.Any foreign company doesn't contribute to a nation's GDP unlike the domestic ones.

14. Beijendorf unregistered

If you read the article, or better yet, head over to Reuters, you'll see the allegations seem made up. This combined with the other tax scandal from India makes this country a no-go for investors. It's not about not paying taxes, it's about a foreign investor establishing a company and an industrial complex in a nation only to suddenly be slapped with billion dollar fines from a corrupt legal system. Also, the very fact that you say "If they have no foreign investments in the country better still" makes me thing you have no idea how an economy works.

32. yadu004

Posts: 72; Member since: Apr 26, 2013

Even though I don't seem to be an expert like you, I'm probably of the belief that Domestic companies contribute more to the GDP than a foreign company does to a nation.Tell me if I'm wrong.

33. rd_nest

Posts: 1656; Member since: Jun 06, 2010

Who are you to decide what system is corrupt? Have you ever ran a country of 1.3billion population? If not, I suggest you to keep your mouth shut. Nobody asked for your valuable suggestions.

35. Beijendorf unregistered

I don't need to run a country of 1,3 billion people to know the very simple definition of the word "corrupt". Christ, dumb much?

37. Beijendorf unregistered

In fact, there's a whole giant section on Wikipedia solely dedicated to the corruption in India:

42. phonetekmek

Posts: 70; Member since: Oct 04, 2013

You need and want a mix and foriegn and domestic business. And if these are made up taxes and charges it will hurst foriegn investment. There is no way you can logically or especially ethically argue for legal extortion of a major international company. Imagine what happens to smaller corporations.

4. troutsy

Posts: 383; Member since: Feb 17, 2012

I don't think you can use the phrase "the latter" following a sentence that doesn't have both a former and a latter.

9. papss unregistered

If true and they sold the phones in India then I agree they should pay but if not then India is grasping for staws

11. KenAdams

Posts: 55; Member since: Feb 17, 2014

Woah! What's with the hate towards India? Every country charges taxes regardless of rich or poor. Well I'm a Nokia fan, but they gotta pay what they owe. And making phones in a country and selling them in the same country rather than exporting is a legal fraud as far as I know in India. P.S - I've been to India.

24. marbovo

Posts: 658; Member since: May 16, 2013

Are you sure what you are saying? In India a company can't make a phone and sell it in the domestic market? So every phone made in India has to be exported and every phone bought in India has to be imported?? That make no sense

30. corporateJP

Posts: 2458; Member since: Nov 28, 2009

The issue here is Nokia is accused of making phones in India to be exported (no tax liability), but instead, sold them domestically and did not report them as such, therefore avoiding any tax liabilities. Both sides are stupid here if this did in fact happen. Nokia for skirting the system and India for such a large sum of back tax requested. The real losers here are the folks with jobs at the factory. I bet MS will squash this in the very near future.

49. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

When a tax collecting entity thinks they have a fine they can collect, they tend to interpret the facts to suit their position. Then, they file all manner of liens and impounds that has the effect of gumming up the works (it put a halt to MS acquisition of Nokia's division). I will bet my last dime that is what is happening with Tamil Nadu - they think they can squeeze some $ out of Nokia, and they are making a hard push to do it. Someone's annual bonus is involved.

13. Sghero

Posts: 3; Member since: Aug 13, 2013

Remind companies why not to go there to build factories or do any kind of business.

15. LikeMyself

Posts: 631; Member since: Sep 23, 2013

Good for Nokia! But now the Indian government needs to invest that money into nuclear weapons or energy instead of helping the poor people, right? Glad I'm not Indian with all the bad attitude of the very rich towards the very poor. Coz the rich are among the richest in the world and the poor among the poorest destined to always beg for life! And my general remark of the people there is that they are extremely money minded!

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